London, England -- (SBWire) -- 01/11/2011 -- After nine months of growth, Britain’s construction industry took a cold weather dip, as outdoor work became treacherous in the icy conditions.
Experts expected the sector to slow a little, but things were worse than feared. Jeremy Cook, chief economist at currency exchange broker World First, said: “This isn’t really a surprise after the ‘snow-apocalypse’ which we experienced last month - coupled with the typical Christmas slowdown. However it is still a cause for concern.
“Construction spending has formed a significant part of the strong GDP figures we have seen recently, and it sets the UK up for a slip in the fourth quarter figures.”
Even though it only accounts for just over 6pc of GDP, the construction sector helped drive the UK’s strong economic growth in recent months. The building industry accounted for 0.4 of a percentage point of the second quarter’s 1.1 per cent expansion and another 0.2 percentage point of the overall 0.7 per cent growth seen in the third.
Since that rapid expansion, which came as the sector recovered from the deep contraction experienced during the recession, construction has been slowing down.
The latest PMI showed a small rise in the number of new orders, which was taken as confirmation that the bad weather was to blame for the lower levels of current activity.
However, there were also signs of continued underlying problems. Employment fell sharply as companies kept cutting jobs and confidence about future business prospects has been muted.
Only commercial construction, compared to civil engineering and domestic building, saw activity increase in December, and it was at the slowest rate in the last 10 months.
Civil engineering and house building both shrank, with residential construction falling at the fastest rate since April 2009, indicating the knock-on effects of a stagnant housing market.
Businesses will be hoping they will enjoy a “catch-up” effect when the thaw sets in, as they did following the last harsh winter.
However, conditions look more challenging this time around, as government cutbacks hit spending on public building.
Original comment can be found at The Housing Market Advisory
http://www.theadvisory.co.uk
UK Construction Recedes